Property & Casualty Insurance Guaranty Corp. v. Beebe-Lee
431 Md. 474
| Md. | 2013Background
- Shelby Casualty Insurance Company's insolvent status triggered PCIGC liability for claims arising from the Ashley Beebe-Lee go-cart injury.
- Ashley sustained severe injuries on June 30, 2003; her family settled with Shelby for $1,000,000 before court approval.
- Shelby's homeowners policy ($500,000) and umbrella policy ($1,000,000) potentially covered the claim; total policy cap was $1.5 million.
- PCIGC initially disputed Shelby's defense duties and searched for coverage or settlements that could be properly contested under § 9-306(e)(l)(ii).
- Circuit Court and Court of Special Appeals held PCIGC could contest settlements only on limited grounds and that two policies could create two separate covered claims.
- Maryland Supreme Court held PCIGC may review settlements to the extent the insolvent insurer could have contested absent insolvency and that two policies can constitute separate covered claims, allowing recovery up to the statutory maximum on each policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to contest settlements | Beebe-Lee contends PCIGC may contest settlements beyond fraud/collusion under § 9-306(e)(l)(ii). | PCIGC argues the statute provides broad discretion to review settlements without explicit limits. | PCIGC may contest settlements only within limited grounds and to the extent the insolvent insurer could have contested. |
| Multiple policies from one incident | Beebe-Lee asserts two policies from Shelby are two separate covered claims requiring payment up to $299,900 each. | PCIGC argues single covered claim for the incident, limiting total payment. | The two policies constitute separate covered claims; PCIGC may pay up to the statutory maximum on each. |
Key Cases Cited
- Igwilo v. Property & Casualty Insurance Guaranty Corp., 131 Md.App. 629 (2000) (determines ‘covered claim’ requires looking to underlying policy language)
- CD Investment Co. v. Cal. Ins. Guar. Assn., 84 Cal.App.4th 1410 (2000) (multiple policies may be separate covered claims)
- Union Carbide Corp. v. Conn. Ins. Guar. Ass’n, 217 Conn. 371, 585 A.2d 1216 (1991) (illustrates treatment of multiple underlying claims under guaranty acts)
- Burnette v. North Carolina, 131 N.C.App. 840, 508 S.E.2d 837 (1998) (addressed guaranty association liability limits across policies)
- Havens Steel Co. v. Missouri Prop. & Cas. Ins. Guar. Ass’n, 956 S.W.2d 906 (1997) (recognizes remedial purpose of guaranty acts and policy stacking)